Tort or Contract: a History of Ambiguity and Uncertainty
| Publication year | 1992 |
| Pages | 241 |
| Citation | Vol. 21 No. 2 Pg. 241 |
1992, February, Pg. 241. Tort or Contract: A History of Ambiguity and Uncertainty
In 1987, this author fielded a case which started as a suit to collect the unpaid balance on an auto loan. The purchaser had returned the car to the dealer after undergoing repeated frustration in getting it fixed. The lender brought suit to collect the amount due it. Incensed at being sued by the lender, the purchaser, in turn, sued the dealer. Soon, there were sixteen claims, counterclaims and crossclaims.
Eventually, the original plaintiff (the lending credit corporation) quietly withdrew from the case. The multiple claims were for breach of warranty, breach of contract, statutory violations (including the federal truth-in-advertising law) and tort alleging fraud and negligence. The parties filed approximately twenty motions for dismissal, summary judgment and partial summary judgment. There were numerous motions for sanctions. All this, when the single issue to be determined was whether or not the car was as warranted. The jury awarded $5,000 in damages to the automobile purchaser. His legal fees were in excess of $80,000.
Unfortunately, this case does not represent an isolated example. It is memorable as a dramatic example of the excesses of the present system of litigation. A number of things caused the problem but, in the author's judgment, substantial causes were the confused line the courts of Colorado have drawn between contract and tort and the adversity created by that confusion. Ambiguity in the law breeds a multiplicity of claims, which breeds a geometrically increased multiplicity of motions, which results in fees and expenses disproportionate to the amount in controversy. Thus, the plea from a respected practitioner:
This article demonstrates the need for Colorado appellate courts to address the overlap between tort and contract claims. It also encourages the development of an analytical framework regarding that issue so client and counsel are forewarned and so pleadings and trial court rulings are not based on speculation. The distinction between tort and contract is important. The distinction determines the measure of damages, the applicable statute of limitations and whether procedural prerequisites such as certificates of review must be followed.Claims for relief should be limited. For every claim, there must be a well-based theory---a theory not based on speculation, but on given, established legal principles.(fn1)
There are perhaps three basic approaches that other jurisdictions have used (with various degrees of adhesion) to distinguish when contracting parties or others having some relationship to the activity of the contract may rely on tort or contract principles to resolve a claim of injury. The first, more popular a century ago, was simply to recognize a distinction between action and inaction. Nonfeasance by a contracting party was actionable only in contract. However, malfeasance could generate either a tort or contract claim. The obvious limitation in this approach led to the recognition that the misfeasance/malfeasance distinction was not a very useful tool.(fn2)
A second method has been to determine first if the activity causing the injury was within the ambit of the contract responsibility. If so, no tort duty independent of the contract obligation arises. The "independent duty" solution is premised on the notion that the parties are free to define their relationship and responsibilities by agreement. Therefore, contract law should be given deference as the means of resolving their differences. Otherwise, there is no point in having a body of contract law.(fn3)
A third approach looks to the nature of the injury. A loss resulting from contract action or inaction which is an undifferentiated economic loss gives rise to a contract claim exclusively, whereas a physical injury should be treated under tort law principles.
Of course, there are a number of special relationships as to which Colorado
A brief review and discussion of Colorado case law demonstrates a lack of consistency, which has caused a genuine problem for disputing parties, attorneys and judges alike.
In the 1961 case of Lembke Plumbing v. Hayutin,(fn4) the Colorado Supreme Court concluded that a homeowner could sue for negligence the plumber who inadequately installed the plumbing in the plaintiff's home...
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